Debt Will Keep You From Being Wealthy!

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I am Jade Warshaw. I am joined by Dr. John Deloney, and we are taking your calls. Yes, our powers combined are taking your calls for the next three hours.

Hi there. Thank you so much for taking my call. It's such an honor to be here and talk to you guys, so thank you. I feel the same.

How can we help?

Oh, thanks. Okay, so to preface my question, which is a little backstory, my dad recently passed away, and he left me and my ... Thank you. He left me and my three siblings his house. We love this house.

I think it is a little romanticized to think that you can all three own this property and kind of be twins on it, and everybody's ready to sell it at the same time, and everybody's happy with the way it's being managed, and who's living there, and what they're paying. Ideally, it would fall to one sibling, and you guys would just say, hey, this person is going to take this. We're either going to sell it right now, and we're going to split it, or one person is going to kind of take this on, and it's their property. They're paying the mortgage, and from here on out, it's theirs.

My bigger concern is that you've got a $250,000 mortgage, but there's probably some accrued equity in that house, right? What have you accrued in it?

Yeah, absolutely. It's probably, just because of the area, it's probably worth six, six and a half.

I've never seen this situation, and I'm sure it exists, so this is just my experience. I've never seen this situation where there isn't one of the siblings' wife, husband, or girlfriend who's saying, hey, this $200,000 would change our life. Let's sell. Sometimes, the siblings are all lock stock. It's one of their kids gets in trouble, and they suddenly need $50,000, or that one brother that always left his underwear out, his kids are going to leave their underwear out all over this house, right?

But there's still a piece of it that, when they sell, people are going to want their.

cut of what equity was. That's right.

How many siblings is it?

It's me and my three other siblings.

So it's four of you.

Yeah, there's four of us.

So essentially right now, sorry, I'm just trying to get my head around the numbers. Essentially right now, with the equity there, before fees and stuff, you'd each have $100,000 in equity.

Right.

Okay. And what were you saying?

Yeah, no, I was just saying, I know one of my siblings would just want out. I don't think that they would want to manage it, so it'd be up to the three of us, but then again, we'd have to buy her out somehow. I know it sounds messy. I was just wondering if I'm kind of deep in the grief and the emotion, so I can't really.

And that's the bigger picture. How long ago did your dad pass?

It's been about four months.

My rule of thumb is six months to a year, do nothing.

Right.

And some of y'all will come out in different stages. And so maybe say, hey, brothers and sisters, we're going to put a date on the calendar for seven months after dad passed. And we're either going to get together in person, if possible, or we're all going to have a Zoom call. And we're going to talk about A, how everybody's doing, and then B, next steps. And usually in this situation, there's one sibling that is to the death, we will never sell this house.

Dude, that's the exact dynamic.

So usually, and it just turns into, oh, you don't care about dad, you just start throwing away our whole life all the way to, hey, dad left me this money, I want my money. And so a way to just do away with all that is that one person who's just diehard can buy it from everybody, and we'll sell it, and we'll get a mortgage, and you can take it over. Or we're going to get a realtor, and we're going to split it, and we're going to sell it. And it's going to be painful, and we're going to have to vote on it. Is there an executor to the will that gets the final call?

Yeah, my brother is the... I don't know if it's an executor, I'm not 100%, but I know my brother, he's the one that's kind of in charge of my dad's financial end of things.

So he's the one that will actually make the mortgage payment for the next three months, while y'all are waiting? Yeah.

Okay. And my dad has money in the... Well, there's still money in the bank, so luckily, the mortgage is still coming out of there. But yeah, he's been in charge of...

Oh, okay. That's good.

Does he want to keep it?

Yep. Okay. But he's very much... He has a rental, and he has a primary residence, and then he used a HELOC to buy his residence now. And so I think that's kind of his plan with this next property.

Well, he's a grown up, he gets to make his own financial decisions. What you get to decide is whether you're going to participate or not. And I think the best thing for your relationship with your family moving forward is to not have a business relationship on top of the sibling relationship.

Right.

And if he's going to keep it as a rental, I love the idea of... I've got some friends that have properties overseas, they've got properties in lake houses. Their brothers and sisters just put on the calendar when we want to go. That's awesome. That's great.

Thank you. I'm sorry. Yeah, it sucks. But yeah, that's life. Great question.

You bet.

That's tough, man. I think it's hard enough when you try to do business with family members, but then when you add a layer of grief to it, it's a disaster, I feel like, waiting to happen.

That's why that rule, that six months to a year, if you can avoid doing anything... Sometimes somebody passes away on a Friday and you got to go work on Monday, right? Yeah. You got to pay bills. But if you can avoid selling something, moving away, immediately, jumping into a new relationship, if you can avoid and just sit with your grief for six months to a year, the fog begins to lift, your new priorities begin to come into clarity, and it just gives you some direction on what's next.

Oh, I feel bad for them, but I'm happy that a good man leaves an inheritance, so I'm glad that he left an inheritance in a way that it's being paid for out of his money until they decide what they want to do with the asset. This is The Ramsey Show.

Today's question comes from Mason in Washington. Mason writes, when I started college, my parents took out a Parent PLUS loan, which I verbally agreed to help pay back. Now that the loan repayments have started, my parents said they are only going to help for one year. The loan is now over $71,000 and the payments are $800 a month. My wife and I have another loan for $60,000, which we are starting to pay off, but we do not have money to pay the loan under my parents' name.

Right.

That's number one. Number two, Mason, you said you'd pay it back. So you got to pay it back. This is the agreement you made. Now, I'll help you.

Right? I mean, the thing with the debt is in this case, he's feeling like, man, my parents, they changed the terms. It was supposed to be them helping like for life, and now they've decided they're only helping for one year.

Or there were no terms. And now you're like, just going to put terms on this. Yep. It's a $70,000 transaction.

But the bigger discussion here, and I hope what you learn from this, Mason, is debt always changes, the terms. Like the terms always change. Whether you took out a student loan and you had the right job to be able to make the payments, and then the terms change when you lost your job and now you can't make the payment. Like, when it comes to debt, there's always something that has the ability to change the terms and make it unaffordable or inconvenient. And that's why I hate debt.

And sometimes we get this call, we get this call and parents say, hey, we're going to take this from you. We're doing this. And then they change the terms. two years later, I'll tell Mason, hey, man, they told you this is going to be theirs. Yeah.

Even though it's like 18 bucks.

It's pizza. Right. And it's not like. I'm in debt to him. But whether you were that guy who had a friend who was always like, hey, you owe me $428 for Wendy's.

And let's just put this in terms that anybody will be able to understand, because this is what's just really rich about this situation. You took out the student loans so that you could have the dream job or that dream career that you thought for sure would be enough to be able to make the student loan payments. And now you're, and I quote, I'm literally shaking while I'm typing this. And I just want anybody listening who's thinking about taking out student loans because they think, oh, I'm going to land that career. Like I'm definitely going to pass my, the bar and I'm going to pass the LSAT and I'm going to be able to do this job and make so much money.

Sorry, Mason.

Yeah. I wish we had, I wish I had a better diagnosis, but you're in debt. You got to pay it. That's it. All right.

No problem. Um, hello. Um, uh, quickly then, um, I started a new job early in September or September of last of 2023..

Okay.

I, I made in about four months from September. for the middle of September to the middle of January. I made, including a bonus, about $42,000, $42,000..

Okay.

Before, before taxes, but so about 30 K afterwards.

Okay.

Um, my question right now is I have an opportunity in my, in my hometown, which is a couple hours from Grand Rapids, to purchase a house, for the house is $41,000..

$41,000?.

Yes. And it's a two bedroom, one half bath with hardwood floors and a partial basement.

Okay.

My, my, my stress here is that I have $6,000 still saved for that. I could use towards a down payment and have about another six for safety and payments and everything.

Wait, why are you, why are you only working a seasonal job? Why aren't you working another job right now?

Um, I tech, I am, but it's very, it's a lot less, the payments in my, in my hometown are, it's very rural, so income is very, is a lot less than my seasonal job.

Would you, what would you make per month on the other months?

Um, I'm sorry, what was the question?

What would you make on the other months that you, you get just other work besides the seasonal job?

Um, it's about a thousand dollars a month.

Okay. Hey, um, I'm going to hold you over, tell me a little bit more. I'm going to hold you over, um, until the next segment, because I want to hear more from this. So the house is $42,000,. I'm sorry, the house is $41,000.

I use a large portion of it to pay off other debt.

Okay. All right. Hang on the line, hang on the line. I'm going to bring you back for the next segment, so we can hear a little bit more about this situation. This is the Ramsey show.

This show is sponsored by BetterHelp. This is Deloney, and I'm always railing against social media, especially in the summer, because everyone uploads the highlight reels of their perfect bodies and perfect vacations and perfect kids. And I know they're not real. And I also know that I'm blessed beyond my wildest dreams, but I still find myself wishing my life was like other people's. And, based on the data, I know this is happening to you too.

This is the Ramsey Show. Thanks for listening. I'm Jade Warshaw. Next to me is Dr. John Deloney.

Yes, pretty much.

Okay. So tell me a little bit more. You've got the seasonal job. You're bringing in around $10,000 a month for this job. And then, on the off season, you have another job.

About $1,000..

About $1,000.. So that's a big difference. And there's no way that you can think of that. that number would go up, right? Because of the ruralness of where you live.

I hadn't thought of that before, but it's definitely something I probably should look into. So thank you for pointing that out.

And, by the way, maybe I'm wrong. I live in a really rural area.

Yes, sir.

And whether it's mowing or picking up sticks, or my 14-year-old shovels horse cha-cha out of the barn all summer long, and then spreads it over the fields for our neighbors. I feel like there's always work to be done out in rural areas. It's not fun work, and it can be miserable, but there's always work, right?

Absolutely.

So is it a possibility that, from just before it gets light outside to just after the sun goes down, you can get out there and find $1,500 worth of work a month?

Yeah, I'm sure I could, and I probably will. I just got home a little bit ago.

I think it's important. I don't think that you can go seven months out of the year and only make $1,000 a month.

Yeah, that's pretty tough.

So that's thing one. Let's find out more about this house situation. And, by the way, let me clarify, it's five months out of the year, right, that you're doing this seasonal job. So over the last five months, you've made somewhere around $8,800 a month. You told me that you were putting that towards debt.

It was car loan and student loans.

Did you pay it off completely?

There's about $2,000 left on my student loans.

Okay, and that's the only debt you have to your name?

Yes.

Cool. Okay, so here's the framework that I would use to decide if it's time for me to buy a house.

And just quick correction, I only worked four months. The season starts in March and ends in January. And there's like a one-year, you're supposed to work a one-year break sometime in there.

You said it starts in March and ends in January. I thought you told me you worked from September into January.

Yeah, that's when I got the job. It's a brand new. It was a brand new job. So I started near the middle of the season. So it's about a nine-month work season.

And are you going to reliably make about $8,500 a month?

Yeah.

For those nine months?

Yeah.

Okay, got it. Okay, so now I've got it. Back to the framework, the framework that I would use for you and, honestly, anybody who called in here to decide if it's time to buy a house is number one, I want to be completely debt-free. Like. that's the number one caveat.

I was planning on financing.

Okay. So at that point, then it's like, okay, I'm going to try to put up to 20% down and do a down payment. So I've got to save up money for that. And then, if you're financing it, you're doing a 15-year fixed rate mortgage, like everybody else, where the payment is no more than 25% of your take-home. And that's where it's at.

It is very discounted.

Why?

For my area.

Why is it so discounted?

Currently, my best bet is it is a foreclosure. You're paying off the mortgage and then you have the house.

And then it needs a bunch of work?

No. From what I saw, no.

The key there is from what you saw.

Interesting. Just make sure you're doing some research on this property.

You can get into a $40,000 house that needs new foundation and floor and walls and roof, and that $40,000 house suddenly costs $200,000 and you're in a mess.

I mean, a good way to test... Obviously, you can get a foreclosure for a lot less expensive, but I'm still wanting to know what real estate in that area costs. Because I'm like, is there water damage? Is there mold? How long has it been sitting empty?

Yes, ma'am.

So, yeah, I mean, my thoughts remain the same. Once you pay off this $2,000 of debt that you have remaining, stack up that six months of expenses as quickly as possible, and then you're saving up that down payment as much as you possibly can. I mean, we always say 5% to 20%, but in this case, it's such an inexpensive property. Get as much as you possibly can and do it like that. And, honestly, if it goes off the market, it goes off the market.

Yeah, because it's not a deal. then. It's not a deal. And I know you often can't do this or usually can't do this with foreclosures, but if there's any way you can take somebody who knows what they're doing, a construction friend or an inspector, and even take a lap around the house and look under the house and look through the windows just to see what you're biting off, man, $40,000 in a neighborhood that normally goes for $100,000 to $125,000, that tells me the bank's just not going to concede $60,000, right? That tells me there may be some work that needs to be done in there.

Yeah. I always tell people that if you're trying to buy a house, there's just a lot of cost that goes into it that we don't always talk about. And you do yourself a big favor, A, by doing your research on the front end before you even make an offer. But then, when you do make an offer, yeah, money has to be in place. Number one, you do have to have three to six months of expenses because home ownership is expensive.

Hey, thanks so much for taking my call.

You're welcome. How can we help?

So I am 40 weeks pregnant. tomorrow. I'm due to have my baby any time now. Wow.

Shoot. Oh, man.

Yeah. I mean, I'm beyond shocked. I'm devastated. I'm scared.

No one saw this coming.

I'm worried about pushing the baby out. And I'm worried about what the heck I'm going to do for money after this. Because I don't have a job to go back to. Yeah. So I just need some help navigating what to do moving forward.

I'm going to have Jade walk you through the money part of this. But here's what I want to tell you. Whenever you get these flash, everything just caught on fire, real fast, right? I always want to go down to a phrase that gets me through all the crisis response stuff. Talking to families who just lost someone or about to lose somebody.

Right.

And so facts are your friends. Jade's going to walk that through. But I want you, and as you and your family, y'all go through this. Your whole life's about to be different. You're about to have this amazing moment.

Right, right.

So let's find some things that we can cling to as facts. Because I do think that's a great idea. So it's you and your husband. Does your husband work outside the home?

Yes, he does. He does. And he makes about $50,000. or he makes $100,000 after taxes. Take home, it's about $6,000 a month between his job.

And what addition does he bring in?

And we can live off his income. So that's good.

Right there. That's the fact that you need to cling to.

Now we're just talking baby. That's it.

Yep. That's it. Just knowing that. I mean, of course, it's always nice to have extra money, especially when your family is expanding. But in my mind, like I'm looking at this right now, Audriona, I'm going, oh God, this could have been so much worse.

Right. And it's going to take... So we've never lived on a budget before. I caught your live segment with George a couple of days ago and I just downloaded the EveryDollar app and signed up for the trial for premium. Great.

That's so good. I'm so proud of you. That's exactly what you should be doing. Very, very good. And so this is going to be an experiment for you guys.

About $60,000 a year. Take home was about $3,000 a month. So like give or take, that's like conservative, because a lot of my income was commissioned. So it was like most months we were bringing in between, like nine and even $10,000 on really good months.

Yeah. So it looks like, you know, that was probably, if we look at it just in chunks, that was probably a lot of your fund money. Like a lot of the money that you guys spent just being able to do things here and there and it not being a thing. A lot of that money is gone right now. But the good news is, like you said, his income is enough to cover, you know, the things that need to get done and the necessary requirements.

So I, you know, I don't know how to even plan for that, because we don't have, neither of us have kids. I don't know like how much diapers are going to cost.

A million dollars.

$50 a box.

A million dollars. And, by the way, tell your sweet husband, babies poop more than once or twice a day. They go like a thousand times a day. And I did not know that.

They do. In the first six months, you go through a lot of diapers. We're just going to be honest about that.

We do have a nice stash. We have a little diaper party. So we have a nice stash.

Good. And your friends and family, they're like, hey, what do you guys need? And they're not really being serious. You can just be look at them with that look of wild, exhausted desperation and say, diapers, send diapers.

Send diapers.

Yeah, yeah.

Can I give you an experiment?

We did also.

Oh, go ahead, go ahead, go ahead. Do your thing, and I'll tell you at the end.

Uh, well, I was going to tell you, um, we did also, like. we have been kind of budgeting because the, I was originally, it's going to be an unpaid maternity leave. So we do have our little, uh, stork fund, I think is what you guys call it. So we have that and the plan with that. So, and this is kind of where I need help.

Well, you're most likely going to, you're almost most likely going to meet your deductible. Like almost always, I feel like.

And, by the way, if you call the hospital administrator and request a walk out the door number, they'll give it to you. I would not rely on the insurance company. I would talk to the hospital.

Okay.

So that's a really good point. Um, I didn't know you could do that, but.

On both of my kids, I walked into the hospital to have the kid. Now, barring, like, you know, there's a complication, the pregnancy or something, an emergency or something, but I walked in with both kids, um, knowing exactly the check, I was going to write walking out.

Okay. And we should, we should still plan on just paying that in full with our little stork fund, right?

Absolutely. That's what it's for.

What is your stork fund? How much is there?

We have like a little less than 10,000.. It's about 9,500.. Now here's the other thing. So I was told, since we're being laid off, I do get a small severance. It's about $5,000..

Okay. How much is that? So another 6,000..

Yeah. Like when it's all said and done, 6,000 plus the five. So like, I'll make like an extra. Like 11 grand in the next three months. Great.

Okay.

And I'm wondering if, now that I don't have a job, like, should we pause that and just.

Not necessarily, not necessarily. If you know that you can live off your husband's income at this point, I wouldn't pause it. It would be one thing if you said, Hey, like my husband's income is not enough to make ends meet. Well then, it's like whatever money you have, we're counting every bean, we're, you know, but you said, listen, we can live off my husband's income. We've got, I've got an extra 10 or $11,000 coming.

And here it is. Facts of your friends. You're safe. You got enough money to pay for everything. You got extra money coming in.

We're all good. Ooh, love that. Yeah. Um, when it comes to babies, I'm always saying like save up for your deductible, save up your out of pocket max. It just helps you sleep well at night, regardless of what takes place.

Hi, gang, John. Thank you so much for taking my call.

You betcha.

So I was just hoping to get your guys' insight on a fun little debate my husband and I are having.

Yeah, me and y'all are fighting. What about?

I love it.

Um, actually, so we're a baby of step four, five, and six, and we feel really blessed to have found out that my husband's being included on his bonus, um, his company's like bonus payout. And this year he started halfway through the year. So we weren't really expecting it. Um, the debate is on what we should do with that money.

How much is it?

It's um, so, so I got a bonus of two grand. Um, and then his is 10 after taxes.

Noice. 12 Gs. Yeah.

So we have some thinking funds for home improvements and, um, you know, kids, college giving and our mortgage. So, um, I'm leaning a little bit toward putting a little bit larger of a chunk toward the mortgage and he's citing a little bit more toward, uh, putting a lot more of a chunk toward, um, home improvements.

Okay. Uh, the home improvements, is this just for fun, or is it like? this needs to like, we gotta get this done.

It's for fun. It's we're doing, we want to do sighting, and garage doors are the big ones.

Oh, me too. Can I just say me too? I need some sighting in my garage door. I think it was built by a small chipmunk. It's time.

That's funny.

Good on you. Good on you.

So, okay. Other question is, are you guys currently, I mean, you're in baby steps four or five and six. So it goes without saying that you're investing 15%, um, into retirement without the bonus. Are you still putting away a little bit for kids college every month? Are you still putting a little extra on the mortgage, or have you not touched those categories yet?

Um, yeah. So with a little bit extra each month, that, like how we've been going, is we're going to pay off our mortgage in 10 years. And, um, we don't really, we put a little bit in the kids college, but we don't have like, that's the one thing we haven't set, like an actual number that we're trying to hit. Um, we just kind of throw a little bit in there each month. Um, we have four kids, so we do like 50 with each kid.

Well, let me tell you, okay, you tell me what you think about this, because this is what me and my husband, Sam do. You know, it sounds like you're taking care of business on the baby steps front with your normal, you know, month to month money. And so whenever extra money comes in, you know, I kind of put it under that framework of, okay, what can you do with money? You can give, save and spend it. And so whenever there's extra money coming in, it's what, what is something that we're doing to give some of this money?

Can I add one more thing to it?

Go ahead.

So, Lindsay, often I'm like you, like whenever we had our mortgage, I kept wanting to baby step to it. And I'll never forget. after being married for 20 years, my wife came to me and said, hey, could we get a headboard that's not off Craig's list that you spray painted in our backyard three houses ago? And I was like, you know what?

That's so me.

Today's going to be your life. I'm a great husband, right? I'm the worst. So, but here's what I found myself falling into. is I just had this idea that I wanted to pay it off faster.

Yes. Yes. That actually, that is perfect. The only, the only bad part about that is I see the con, like. that's the best way to go.

You got to let that go, sister. That ego's going to bury you.

Yeah, let it go.

It's all, it's all in fun. It's all in fun.

I know, I know.

But yeah, no, that, that, uh, that's, that's actually a really good idea. Cause I, I do know he speaks kind of truth, where I sometimes do get a little bit fired up and passionate about, um, you know, focus on one target, but he is like, slow down.

Well, I don't mind passion about one target, but let's be very clear about that. target. is not just, I want to pay this off faster. All right. What does that mean?

Yeah, I'm with that. I'm with that. I like it. Cause the fact of the matter is for some people like paying off debt, whether it's their actual debt or their mortgage, or whatever it is, like. they get energy from that.

And you're just melting your joy away.

Yeah. So it's so, so important, when you get to those upper baby steps, four, five, and six, to do really what John said and just make sure that you're having those clear conversations and that you're not just bulldozing through, not to say that she's a bulldozer, cause she's not, but y'all, y'all understand what I mean? This is the Ramsey show.

Hi, guys. Hi, guys. Thanks for taking my call. Okay. So I have a question.

Welcome to the man house.

Welcome to the jungle.

We're glad to have you.

So I have a question on how to line up what we've been doing, because I think up to this point, we've been doing our best, but it's not really lined up with the plan. So since December, we have established the $1,000 emergency fund and we have another $4,000 in savings. Um, we only have one credit card in which we owe $5,000 on, and I know I could pay that off, but I have a question about that. So I do have a son who is going to start college in August and, um, I'm trying to figure out how to do one, two and three, and then still be able to pay for college. So he has gotten a lot of scholarships and financial aid.

That's what he's earned.

Well, that's what he'll be paying, what we'll be paying.

That's what you'll be paying.

It's 18,000..

How much of that, you said, um, scholarships and financial aid, how much of that is student loans?

No, that's what I'm trying to avoid.

Ah, okay. Okay. So, after all the scholarships and everything, it's 18,000, it will be the all in?

Out of your pocket.

All in costs. Okay, gotcha. Yes. And so like over the nine months, basically of the year, that'd be $2,000 a month. And that's where the $4,000 in things came from.

Yeah, you're broke.

Yes. Y'all aren't safe.

Yeah. Well, I mean, yeah, so like, I mean, like. we have money in our retirement and we have, we don't owe very much on our house and all that. But like I said, we're kind of scattered all over the board.

That's right. What type of school is this? Is this a university, state university?

Uh, it's, it's actually a private university. Um, but yes, it is a four year degree.

So here's, here's my take on this, and you know, you can take it or leave it, or take parts of it. Um, paying for college is a gift that is a privilege for us to be able to give, right? And it's something that we can do out of the abundance of us handling our money correctly.

That's actually like, I love the community college idea. Y'all aren't going to do that. I know you're not, I've, I've worked with colleges for 20 years. Y'all aren't going to do that. He got in, he got the scholarship and that feels good.

Right. And he doesn't start school until August.

Great.

That's all he's got time.

I mean, if I did $2,000 from now until August, how much would it like, this sounds like a super question, but I actually don't know this. How much is like a three to six month fund? It's not a stupid question.

It's not stupid at all. So when we talk about it, matter of fact, a lot of people are going to get help off of that question. When we talk about three to six months of an emergency fund, we're truly talking about basic expenses that make your household run. So if you look at your budget with in all its glory, right, with all the bells and whistles and there's extra money there for you to get a haircut and get your nails done and to go to the movies and all these three to six months of expenses doesn't include all that stuff. It's like, all right, it's the mortgage.

There actually, yeah. So there actually is a chance, from now until August, that I could pay off the credit card and get three months, probably not six, but three months saved up.

There is, but I want you to realize that there's another baby step, even after that, which is saving 15% of your income into retirement, which is so, so important for you.

And we are actually doing that one. That's what I meant by. like, we're all over the place. And so, like we actually do have that one in place.

15%?

Hey, listen, as somebody who spent my entire career working with college students and their families, please ask your child to participate in some shape, form or fashion in their education. Please.

Yes. And I do plan on that. I don't necessarily want them to do it first semester.

Why not?

Because I'm worried about the transition.

Don't be. In fact, one of the things about the transition is kids will go to a residence hall, they will know nobody and they'll hold their phone and they'll stay connected to their old high school friends now, and they never make the separation. If they go to school, they get plugged into their academics and then they go have a job. They have a thing that they have to go to, a purpose, a place to be in, a built in human community that they have to interact with. It's not a bad thing.

And who does work now? I know. That wouldn't be hard.

But that needs to, you need to sit down and say, here's a dollar amount. And, by the way, that $18,000, as Jade said, doesn't cover haircuts. He's going to want to go on a date. He's going to need new shoes. He's going to need new clothes.

Yeah, it's so, so important. I'm glad that you're in a better financial situation than I thought. And you, it sounds like you do have the money to pay for this, but I completely agree with John. Make him pay some piece of this. Skin in the game is absolutely necessary.

I'm done. You did it? I already got mine back and filed, man. They crushed it for me. It's awesome.

Wait, so it's filed. Did you already, did you get a return or no?

I did. Yeah, I'm still figuring out all the commission stuff. on book sales. I'm still figuring out how it works. Right afterwards, I went and met with the CFO here and I contacted our tax person to adjust the withholding ratio, because my return was-.

It went crazy.

It was silly, yeah. But all I can say is, man, I've got a weird thing. I like to get them done and get, like, well, I need to know what I need to know. Same.

I send that stuff off lickety split to our mother-in-law, who is an amazing bookkeeper, Books by Nita. I'm just saying, just a little something, something there. All right. Anyway, you need to get yourself a Ramsey Trusted Pro, though, not my mother-in-law. So here's the thing.

Okay.

So here's the thing. You could definitely use a software like Ramsey SmartTax if you feel confident in filing your own and that your situation is actually relatively simple. So here's some kind of guidelines to know if it is or not. We would recommend working with a tax pro. if you have some sort of major life change, like, I don't know, you retired or you received an inheritance, or you adopted a child, something like that.

Well, and I actually did both of those. You know, as a Ramsey employee, Ramsey Tax is open to us for free. And so I actually ran my own stuff and sent it to the accountant and said, I think this is where we're going to end up.

Were you close?

It almost bullseyed it. And so that software is pretty good. Now, I've got a super simple return. I'm a pretty lame, boring guy, but it was right on. It was right on.

If I think about filing my own taxes, I can feel my eye starting to twitch. It's already starting to twitch. I can't and I won't do it. All right. Let's go to Colin, who's in San Diego, California.

Hi, guys. Thank you so much for taking my call.

You bet. How can we help?

Well, first, I wanted to say tax season actually makes me very excited as a taxpayer. Oh, okay.

Okay. This is your Super Bowl. It is, yes.

So I'll start with my question, then I'll give some context. So I'm curious what you guys would think about filing a Chapter 7 bankruptcy, given my age and current financial situation. I know it's supposed to be the last resort option, but right now, I'm 24..

How much do you owe, brother? Colin, how much do you owe?

It's not like an insane amount, it's about $34,000..

Okay, $34,000.. And tell me about your mental and emotional health challenges that make work hard.

So, at least right now, what I know is I'm pretty open about it, so I don't mind saying it on air. I have a major depressive disorder and emotional anxiety disorder, and they've played impacts on my jobs over the past couple of years.

How are you waking up every day and leaning into getting well? What does your wellness adventure look like right now? What interventions are you taking?

So one thing that's really helped is I did go back to school, and I started a new career path, and that has actually helped. Being in the tax field has actually helped quite a lot.

What are you doing right now? Are you under the care of a licensed mental health professional or a doctor? Yes. Okay.

Yes, two.

Two, okay. So I'm assuming you're taking medication for a major depressive disorder, at least, right? Yes. Are you taking some sort of cocktail?

No, just a single one.

Just a single one, okay.

When I see him next, I'm going to be talking about that, actually.

Okay, so when you see your practitioner. next, a couple of things. I want you to discuss. Medications, fine. It's going to be a bridge to getting you from here to there.

Yeah, and that's actually, the. attendance has kind of been too late, and shifts have kind of been the issue.

Here's the other side of it. It's the tiny little steps towards showing up, towards going for a walk, towards talking to a friend, even though your body is screaming at you, saying that friend's not safe, knowing that once your body experiences that friend is safe, then suddenly the lights start to come on a little bit. And so, when you sit down with your provider, I want you to ask, in addition to medication, can we have three or four tasks that I'm going to begin to work on on my own?

Absolutely.

Please look at this, as I'm working towards empowerment, not looking towards someone to come save me. Yeah. Do you see what I'm saying, the difference?

Absolutely.

Okay. Are you, have you ever been suicidal?

Yes. Yes. It was a while ago. Okay. I've discussed with my professionals, so I'm not anymore.

Well, hey, I want to applaud you, because saying it out loud is hard, right?

Yeah. Yeah.

Now you're going towards the heart, right? You're choosing heart. You're leaning in towards discomfort, and on the back end is a guy. Now you got a new friend across the country that's cheering you on. You got two new friends, me and Jade, plus millions of people.

And I'm asking you, as your new friend, to please not file, because here's the thing. You're knee deep in your situation, and you can't always see the forest for the trees, and so you need external people to kind of look at your situation and go, oh, I see it for what it actually is. And John and I are looking at this, and we're going, oh, no way in the world do we file.

Don't, don't, don't, don't, don't.

And I think for you, the biggest workaround is what John said. You have to get to a situation and get to a level of health where you're able to work, and so that you can get this paid off. Because, I'm guessing, I don't know what kind of debt it is, but whatever it is, just a reasonable salary, you're out of this in a year and a half or two years.

And so we're working towards empowerment, standing taller, getting that work in, and that's the path to freedom. Hang on the line. I'm going to send you both of my books.

All right. Let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates, but when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey Trusted Agents aren't just experts who guide you through buying or selling. They're someone you can trust to have your back from the first call to closing day.

You're listening to The Ramsey Show. I am Jade Warshaw, one of your hosts today. You can call me a co-host because I have another host, and his name is Dr. John Deloney, and we're taking your calls all hour long. So give us a call.

Hello, John and Jade. Thank you so much for taking my call today. So my name is Jason. I'm 24 years old, and I'm from Orlando, Florida. I want to start off first by giving my question, and then I'll wait, and then go ahead and give the breakdown on the numbers.

Ooh, love it. Okay, yeah. Well, let's hear about the debt, and then we can talk about what a budget might look like for this.

Okay, awesome. So I want to just first start off by saying that I already paid off, in the last two months, $8,000 on my credit card debt.

Okay, good.

So right now, I own, I have a card loan of $13,000..

Okay.

I have student loans of $15,000..

Okay.

And I have leftover credit card debt of $9,000, so totaling $37,000..

Okay.

And... I'm a recent graduate. Oh, go ahead.

Oh, I was just going to ask a little bit about the lady, the young lady that you want to propose to. How long have you guys been seeing each other?

Oh, yeah. So we've been seeing each other for four years now. So I'm planning for next year to move out with her, move in together. I'm currently living with my parents.

Is that before you propose or after you propose?

That's one of the things that I wasn't exactly sure on, if I should propose first before moving out or propose after moving out together. That's something that I haven't completely decided on. Maybe you guys can help me with that too.

It's been four years, man. What are you waiting on? Yeah.

I'm not going to tell you to pay off your debt before you buy a ring.

To pay for the ring first, right?

I think I'll go down to the courthouse this weekend and get married. It's four years, dude. It's half a year. Half a decade. What are you waiting on?

That's fair.

Listen, it's nice to have help. It's nice to have a partner.

That's true. That's true. I was thinking about moving in together, coming in debt-free, at least in that sense. But what I don't want is to pay off my credit card and all my loans, and then going in debt again by buying an engagement ring, not having enough money, and then purchasing my credit card again.

But that's your choice.

I definitely don't want to do that.

You have to remember, all of this is on you and it's your choice. Nothing's going to make you go into debt unless you decide, I'm just going to go into debt and buy this. And so, since you called us, I'll tell you what my chain, what my timeline would be, and what I would do. And if it doesn't jive with the way you are or what you believe, then you can take what you want and leave what you want. But if I were you, I'd say, okay, I've got this debt.

Now, Jason, I'm going to go negative for a second. Can you hang with me?

Yep, I'm here.

All right. Jade and I would not have jobs if everybody who had a plan, if it all worked out, exactly as they lined their plan up. It's just not how life works. We only have jobs because people have great ideas about stuff, and it all goes sideways.

Yes.

So you think you're saving yourself a bunch of heartache, and I don't want to put the apple before the cart, you end up just playing, you end up getting in a big old jumbled mess. And so, following Jade's advice here is really, if you're my brother, if you were my son, if you were one of my close friends, I would give you the exact advice that Jade just gave you, simply because it clarifies and cleans up your life, and it makes your path much more simple.

And it doesn't involve you waiting to start your life.

Yeah, you're waiting to start your life. It's an amazing thing called being married, which is chaos and incredible. It's so great, and messy, and fun, and scary, and all the good stuff, and Jade, and I wouldn't trade it for the world, but you're just keeping it all on pause, right?

Right.

Does your, I'm going to call her your fiancé, does she have debt?

She only has, oh, actually, yeah, she does have debt. She has $1,000 in credit card loans, and she has an expensive car. She has, I think, $20,000 right now in the car, but that's about it.

Yeah, so I think that, again, you are downloading EveryDollar if you don't yet have it. If you want the premium version, you can do everydollar.com slash jade, and I'll give you a promo code so you can have premium for a couple of months. And you're setting up your budget in a way that is allowing you to make headway, paying off this debt, because paying off debt's a great thing. Pay off as much as you can, but it's also setting aside some money so you can spend, you know, a percentage of your income on a ring, maybe one month's income on a ring, right? And then, as soon as you give her that ring, it's like, hey, how quickly can we get married?

So I have $2,200 left over after my monthly expenses. How much would you say, like, from those $2,200 should go into paying that, and then the other saving into the engagement ring?

So you have $2,200, that's your income, or is that margin?

No, no. So my monthly take-home pay is $4,000, but my monthly expenses are $1,800.. So leftover is $2,200..

Okay, so that's the margin. And you're saying how much of that should go towards the debt, and how much should go towards the ring?

Correct.

I mean, if you wanted to do, if you're trying to buy a $4,000 ring, then split it in half. And say, I'm going to use half of this to pay for the debt, I'm going to use half of this to go towards the ring. And in four months, you're proposing. And four months also buys you time to get your head around the fact that, like, man, I'm about to be a married man.

And I got to move out from my mommy's house. Yeah. Get my own place.

24..

Game on, dude. Game on. We're going to be all growed up. And we're going to follow the great Beyonce's advice. If you like her, then you better put a ring on it.

That's right. That's good. John, I'm proud of you.

Thank you.

Queen B, that's good. I never thought I'd see the day.

Here we are.

Guys, we're always going to tell you to get married, by the way. If you're in a situation where you have been dating someone for, like, five, six, seven, eight, nine, ten years, we're almost always going to tell you to piss or get off the pot, man.

Either get married or call it.

That's right. Or call it. That's right. And don't let debt keep you from pushing. start on very valuable and meaningful relationships in your life.

Well, we wanted a strong end to the show, Jade. We need someone to really land the plane.

Someone who could land the plane.

Yeah, that's who they call in. I love it.

Well, I'm glad you're here. It's fun to host together. Let's go to the phone lines. We've got Yvette in Los Angeles, California. What's going on, Yvette?

Hi, thanks for taking my call.

No problem.

So I'll start off with a question, give you some numbers, and then some reasoning. Okay. So we have a mortgage on two homes. One is a primary residence in California, and the other is an investment property in Arizona. Okay.

Can you tell me what the total of that all is, so I don't have to add it up? The $389,000 plus all that? $610,000.. Yeah. Okay, thanks.

So selling. that would allow us to pay all that off. And then what we would do with the profits from the home is we would put $60,000 toward the Arizona principal, which would lower our mortgage.